Latest news with #CarWars
The Drive
4 days ago
- Automotive
- The Drive
2025 Has the Fewest New Car Model Launches in Decades
The latest car news, reviews, and features. 'What's wild this year is that we expect 159 [car] models to be launched over the next four years,' Bank of America senior auto analyst John Murphy said this week at an event in Detroit. 'Last year, it was over 200. Traditionally, it's over 200,' (over a four-year span). If automotive product news has seemed a little slow, you weren't imagining things. Among all the shake-ups we're perceiving in the global economy right now, a stark reduction in new cars coming out is a very real one. Bank of America does an annual auto industry forecast report called 'Car Wars.' This year's will be presented on June 21. But Murphy, effectively the face of the program, teased the quote above and a few other nuggets in a smaller presentation on Wednesday. He also noted that there are 29 new car models coming out in 2025 'and that's the lowest number we've had in decades,' according to Automotive News . He went on to connect that slowdown to the industry's rapid pullback on electric cars. 'This is really an indication that a lot of what's been going on with EV investment and distractions otherwise that have really pulled product planning in many, many different directions. What you're seeing is the push out and cancellation of numerous models, mostly in EVs.' 'Distractions' is an interesting word choice there. As recently as a year ago, all anybody kept telling me was that electric cars are the future. But in 2025, regulations are snapping back to favor gas guzzling, and innovative products that were showered in praise, like the electric Mercedes G, are now being roasted by their own companies. So I guess, yeah, the R&D that gave us the tank turn does look a bit like a distracting sidequest in the rearview mirror. Clearly, Murphy doesn't seem to think electric cars will be a growth area in the near future, considering changing legislation and slow sales. 'I think 8 percent might be the high-water mark for EVs in the U.S., at least for the next four or five years … And it may prove to be the high-water mark total.' The Detroit News reports that Bank of America predicts 71 EV models coming through in the next four years, 'about half of what the forecast had expected two years ago.' There's more empirical context on this that's been shared around on mainstream media and industry publications this week, but it basically boils down to: Fewer new cars are coming out, by a huge margin, and that's going to affect everybody from automakers to suppliers to marketers to dealers and everyone else who's paycheck is powered by cars being updated. I'd like to think that longer waits between model changes would mean, at least, we'll see bigger leaps in technology and performance when things do get updated. But candidly, I think automotive technology peaked around the turn of the millennium and now we're just watching car companies figure out how to cut costs. Now I don't mean to sneak a hot take in here, but from where I'm sitting, the only category of cars that's made the most meaningful, practical, and useful advances since about 2015 is EVs. That said, I also understand why people aren't buying them—they're expensive, and if you don't have home charging, they're just a little too inconvenient for what they cost. We'll have to wait until June 21 to get the full download on Bank of America's car-industry forecast, but Automotive News did share one more interesting takeaway from this week's 'Car Wars' teaser. Murphy thinks the crossover market is finally saturated. He said other light truck and small-car segments would be the ones to expand in the near future. Maybe the tanking economy has a silver lining after all: a potential comeback for smaller vehicles. Got a tip? Send us a note at tips@
CNBC
5 days ago
- Automotive
- CNBC
'Car Wars': Five auto insights investors should know from top BofA analyst
DETROIT — The automotive industry is experiencing unprecedented disruption and uncertainty when it comes to regulations, electric vehicles, software innovations and competition from China. Such disruptions have been years in the making, but many of the issues are coming to a head sooner rather than later, causing chaos for automakers and their plans for new vehicles. "The unprecedented EV head-fake has wreaked havoc on product plans," Top Bank of America Securities analyst John Murphy said in the firm's annual "Car Wars" report. "The next four+ years will be the most uncertain and volatile time in product strategy ever." The proprietary "Car Wars" report predicts future products and plans over the next several years. The thesis of the report is that replacement rate (or the percentage of vehicles that are expected to be replaced by newer models) drives showroom age, which drives market share, which drives profits and stock prices. Automakers above an industry average replacement rate of 16% over the next four years include Tesla (22.4%), Honda Motor (16.9%), Hyundai Motor/Kia (16.5%) and Ford Motor (16.1%), according to Car Wars. At the bottom end of the analysis are Nissan Motor (12.3%), Toyota Motor (13.7%) and traditional European automakers (15.2%). General Motors is at 15.7%, while Stellantis is at 15.4%. Aside from the replacement rates, Murphy on Wednesday made several predictions about the auto industry. Here are five investors should know about: Murphy expects the roughly $1.9 billion in expenses and write-downs Ford announced last year due to the termination of a planned all-electric three row SUV will be the first of many such losses for automakers regarding EVs. "There's a lot of tough decisions that are going to need to be made," he said Wednesday during an Automotive Press Association event in suburban Detroit. "Based on the ['Car Wars'] study, I think we're going to see multibillion-dollar write-downs that are flooding the headlines for the next few years." Automakers rushed to spend billions of dollars in recent years for EVs in anticipation of a market that hasn't developed as quickly as expected. Amid the EV uncertainty, many automakers have pivoted to "customer choice," which means significant investments in other technologies such as hybrids and plug-in hybrid vehicles, as well as in traditional vehicles with internal combustion engines (ICE). Due to that volatility and uncertainty, Murphy said automakers must lean heavily into their core products, including internal combustion engines, to generate capital. "Really, everybody is leaning back into their into their core over the next four years in very uncertain times," Murphy said, noting that cash "is going to be critically important" for automakers in the years ahead. The title of this year's "Car Wars" investor note underscores that change: "The ICE Age Cometh as EV Plans Freeze." Industry uncertainty isn't exclusive to the U.S. The Chinese auto industry — the world's largest car sales market — is in the midst of a price war and stalling sales. "What you're seeing in China is a bit disturbing because there is a lack of demand; there's extreme price cutting, and there's a lot of export that's rising, particularly over the last four or five years. Essentially net neutral to over 7 million units last year," Murphy said. The top BofA analyst described this as the Chinese market beginning to "implode on itself" due to the price war, which is expected to cause mass consolidation of China's hundreds of automotive brands. In China, the average car retail price has fallen by around 19% over the past two years to around 165,000 yuan ($22,900), according to a Nomura report this week, citing industry data from Autohome Research Institute. Price cuts were far steeper for hybrid or range-extension vehicles, at 27% over the last two years, while battery-only cars saw prices slashed by 21%, the report said. It noted that traditional fuel-powered cars saw a below-average 18% price cut. While very few exports come to the U.S., Murphy said it's expected Chinese brands will eventually compete in the market. However, he cautioned it might be best to shield the U.S. market from Chinese brands in the near-term to avoid such issues domestically. "I don't think just from a technology or geopolitical perspective, that you really want to wall off the U.S. from China. It may be just simply that massive excess capacity you want to protect the U.S. market from until it works itself out and we see massive consolidation in the Chinese market," he said, adding there's good reason for massive tariffs on Chinese car imports. "Car Wars" predicts there will be a shift in new vehicle introductions during the second half of this decade, as automakers refocus product lineups and slow replacement rates in the near term. A major shift is in crossover vehicles — which have a combination of SUV and car characteristics — that have significantly grown in popularity in past decades. BofA reports the crossover "surge is done." For the first time nearly 20 years, Murphy said crossovers underrepresented versus the launch gains for the past 10 to 20 years. "What's wild this year is that we expect 159 models to be launched over the next four years. Last year was over 200; traditionally, it's over 200," Murphy said. "We have never seen this kind of change before." Part of the shift comes as the Detroit automakers — major producers of such vehicles — have focused on updating or redesigning their highly profitable full-size pickup trucks. Japanese automakers have also had an uncharacteristically volatile product cadence, with a focus on cars, according to the report. Investors have been skeptical of many auto stocks in recent years as expected growth areas have faltered. But Murphy believes there's still notable potential for automakers as well as their retailers in software — a focus area for companies as of late that also has not grown as much as initially expected. "In the near term, it's leveraging the connectivity, going after what we know is a very lucrative part of the value chain," Murphy said. "They've been somewhat shut off from lack of attention to the consumer and a dealer body that needs to be reworked to some degree in a significant way, will create a real, real opportunity." The aftermarket industry and business at dealerships, including sales and service, represents $2.4 trillion in revenue, Murphy said. Of that $1.2 trillion captured by dealers, they generate about $53 billion in profits. He argues there's another $1.2 trillion that's escaping automakers, with $133 billion in profitability that could be gained through vehicle connectivity. "It is vision critical that you get the dealers on board with this and drive this," Murphy said regarding getting customers into dealerships instead of non-franchised repair shops.
Miami Herald
5 days ago
- Automotive
- Miami Herald
‘Car Wars' report from Bank of America sees ‘rough ride' for industry in next couple years
FARMINGTON HILLS, Michigan - Bank of America's annual "Car Wars" report forecasts a "rough ride" for the U.S. industry in the next couple of years because of low model replacement rates and struggling electric vehicle growth. The annual study led by analyst John Murphy predicts automaker performance in the U.S. market by looking at product launches over the next few years with the premise that automakers with higher showroom replacement rates will perform better. The report predicts those rates in the next couple of years will be historically low ahead of major truck launches from the Detroit Three later this decade, and because of cutbacks in electric vehicle products from low demand. "What's wild this year is that we expect 159 models to be launched over the next four years," Murphy said before the Automotive Press Association. "Last year, it was over 200. Traditionally, it's over 200" over a four-year stretch. He added: "This year, at 159, is a dramatic decline from above 200 last year. We have never seen this kind of change before." Murphy noted there are 29 new model launches this year, the lowest in decades. He attributed the declines to a pullback in EV investment. Adoption of vehicles with all-electric powertrains has failed to meet industry expectations, with them comprising about 8% of annual U.S. sales. Limited access to charging stations, higher prices of EVs compared to gas-powered alternatives, range anxiety and more have limited adoption. Car Wars is predicting 71 EV nameplates being offered over the next four years. That's about half of what the forecast had expected two years ago. "There are a lot of tough decisions that are going to be made," Murphy said. "Based on the study, I think we're going to see multi-million dollar write-downs that are flooding the headlines for the next few years." Ford Motor Co. last year wrote off nearly $2 billion when it canceled plans for a three-row all-electric SUV, saying it wasn't going to be profitable within the first year. Murphy underscored that automakers will best serve their shareholders by emphasizing their core business - which is gas- and diesel-powered SUVs and trucks - and leveraging connectivity to get customers returning to smaller, strengthened dealer franchises. From those revenues, then, it can invest in future technologies like EVs, autonomy and other software applications and brave threats like tariffs and Chinese competition. "I do think, as we look at this, although we've said lower product intros, that these core products that generate a lot of profit for the companies, including the D3, will likely create a pretty profitable next few years for the industry," Murphy said. "So although it looks a bit scary at the moment, I do think we're looking at a pretty good upside to earnings, and potentially stocks over the coming years." Traditionally, replacement rates average about 15% in the industry. Car Wars predicts rates at about 11% in 2026 and 2027. "It's gonna be a little bit of a rough ride for these two years," Murphy said. The report predicts the Detroit Three's replacement rate from model year 2026 to 2029 will fall around the industry average of 16%, indicating a likely stagnant market share. Ford's was at 16.1%, General Motors Co.'s was 15.7% and Chrysler parent Stellantis NV's was at 15.4%. Ford Motor Co. spokesperson Mike Levine emphasized the Dearborn automaker has new product in the marketplace today, including the full-size Ford Expedition and Lincoln Navigator SUVs that recently went on sale. "Ford is committed to offering our customers vehicles that they love and can't live without," he said in a statement. "We are investing in all-new ICE, hybrid and electric vehicles to provide customers with freedom of choice to find the best vehicle to meet their needs." Representatives for GM and Stellantis declined to remark on the report. On the upper end of replacement rate, meanwhile, is Tesla Inc. It has a 22.4% replacement rate, indicating the Texas EV maker could grow its market share in the coming years. But the rate is also a bit "dubious," Murphy declared, noting Tesla has postponed launches and favors more frequent updates to its vehicles versus total redesigns. "That's questionable whether that all will happen," Murphy said, "given their track record of not really introducing new-generation models." On the lower end is Nissan Motor Co. Ltd. with a 12.3% replacement, indicating it could lose market share. The automaker is under financial stress, has cut jobs and is losing market share in the United States with aging product. "Nissan remains a mess," Murphy said. "It's just unclear what their commitment is, in their current form, to the U.S. market." Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
